What you want to achieve
How to pick stocks with a process, not a hunch
Most investors spend their time looking for the next great share. The ones who do well spend more time on the rules around it: how much to buy and when to sell.
The challenges
- Buying on tips, headlines or social media.
- No rule for how much to put into each share.
- Holding losers too long and selling winners too soon.
- Not knowing whether your picks beat a simple index after costs.
How a disciplined process helps
Screen with evidence
Start with characteristics that research has linked to returns over long periods: value, profitability, momentum and low downside risk. A screen narrows thousands of shares to a manageable list.
Our guide to what works in investing explains these factors.
Size before you buy
Decide the maximum percentage of your portfolio for any one share, and stick to it. Sizing limits the damage from the mistakes every investor makes.
This is often the single biggest improvement people make.
Know your exit
Write down what would make you sell: a change in the reason you bought, a fall beyond a set level, or a better use for the money. Selling with rules removes regret from the decision.
Our article on testing a famous investor’s trade shows the process in action.
Where to start
- Guide: Investing isn’t stock pickingWhy the process around your picks matters more than the picks.
- Guide: What works in investingThe research behind a factor-based, rules-driven approach.
- How to test a famous investor’s tradeA process for checking an idea before you follow it.
- Free investing toolsCalculators and checkers for pensions, risk and portfolio quality.
Questions people ask
Do you give share tips?
No. We teach the process of finding, sizing and selling shares, not which shares to buy.
How many shares should I hold?
Enough to be diversified across sectors and countries; many process-driven investors hold between 15 and 30 positions alongside funds.
Is stock picking better than index funds?
Not automatically. Measure your results against a low-cost index after costs; if you are not beating it, change the process or use the index.
Important: this page is education and information only. It is not financial advice or a personal recommendation, and it does not take your circumstances into account. The value of investments and pensions can fall as well as rise, and you may get back less than you put in. Past performance is not a reliable indicator of future results. If you are unsure what is right for you, speak to a regulated financial adviser.